Dunderdale became the uncontested Progressive Conservative leader after former premier Danny Williams quit politics in late 2010.
She led the Tories to a third straight majority government in October 2011 but resigned on Jan. 24 amid questions about her leadership and a dramatic slide in approval ratings.
Her resignation leaves the Progressive Conservatives with 33 seats in the legislature compared to 11 Liberals and three New Democrats.
In a statement, Dunderdale thanked the people of her district of Virginia Waters for the privilege of representing them since she was first elected in 2003.
"I am honoured by the support you have shown me throughout the past 10 1/2 years since you first elected me, and I am deeply grateful to you for giving me the opportunity to serve you."
Premier Tom Marshall said Dunderdale is a role model for all Canadians but especially for young women in Newfoundland and Labrador.
"Kathy served our province in key ministries at crucial times, and made history in 2010 by becoming the first woman to lead our province as premier and, again in 2011, by becoming the first woman to win a mandate as premier of Newfoundland and Labrador," he said in a statement.
"As premier, as in so many other capacities, she has written an important chapter in our province's history, shattered glass ceilings and opened doors through which others will one day walk."